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The cannabis industry’s rapid evolution and new strategic partnerships with mainstream brands reveal a far larger possible market for legal marijuana than investors and analysts first anticipated, according to Cowen.

“Our broader, big picture view of cannabis goes beyond the adult use launch in Canada,” she wrote in a report this week. “Rather, we believe this is the first step toward the establishment of cannabis as a key functional ingredient touching multiple consumer categories with four key verticals: adult use, beauty and nutraceuticals, OTC pain and sleep, and pharmaceuticals.”

What links these examples is the phenomenon of continuing to throw good resources (time or money) after bad, hoping for things to improve when there’s no good reason to believe they will.

In other words, people are loath to cut their losses. We are much more likely to continue to senselessly plough time or money into a project that isn’t working out, in the hope that it will get better, than take a hit and walk away. What drives this is optimism (that, against the odds, the situation will improve) and an aversion to failure.

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“We are all susceptible to these biases”, says Dr Jim Everett, a social psychologist and researcher at Leiden University. “But often, we can partially offset them by taking a step back and thinking through the alternatives.”